Make Money Move by Lauren Simmons

Author:Lauren Simmons
Language: eng
Format: epub
Publisher: HarperCollins
Published: 2023-11-07T00:00:00+00:00

8

Asset Classes

If you’re going to grow your money, you need to understand what kind of economic environment we are currently in. So, if you come back to read this book in two years, we won’t be in a recession; if you pick up this book in ten years, we most likely will be back in a recession. The economic environment you’re in will determine where you will invest more, and in which asset classes. If you want to grow your money when the economy isn’t doing well then cash is king. Interest rates are high now, which will benefit you to grow your money. But if the environment is on the upswing, then you have different options to invest your money; it all depends on the economic environment. To be an informed investor and empower your view of finance, you need to know the financial language. That begins with understanding asset classes.

In finance, you will hear people refer to “portfolios.” I had someone say, “Like, is that an actual book?” The answer is no, a portfolio isn’t a book. This is the term for your group of financial investments. Asset classes are also groups. They’re a group of financial investments that includes cash, alternative assets, stocks, futures, and fixed-income investments. So if you have a group of investments, then you have an asset, or a portfolio.

There are many ways to invest, but first it’s important to understand the two ways to look at investing strategies. There’s investing for the short term, and there’s investing for the long term. Anything over twelve months is considered a long-term investment, and anything less than twelve months is considered short-term. With a short-term investment, you plan to have your money wrapped up for a short time (for less than twelve months) before you expect a return. Long-term investments take a little bit longer to mature or show a return.

The name of the game is to have a diverse portfolio—to spread out your investments across different groups to increase your chances to grow your money. A diverse portfolio is important because you don’t want to get too fixated on only one way to invest. Most people think that the only way to invest is through the stock market or through retirement accounts. When you look at asset classes, you open your mind to the many different categories in which you can invest your money and the many ways to grow your money.

Let’s take a look at the five major asset classes:

Alternative assets, which are usually physical assets like fine watches, real estate, collectible cars, art, and jewelry

Stocks, which represent ownership of a piece of a publicly traded company

Fixed-income investments such as government bonds and deposit certificates

Cash, such as dollar bills, and cash equivalents such as savings accounts, retirement accounts, and 401(k)s

Futures and other derivatives, which are contracts between two parties agreeing to buy and sell assets, usually commodities like gold, corn, wheat, or cows, at a future date

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.